Federal Treasurer Jim Chalmers says the much-discussed stage three tax cuts remain legislated to kick in from July 1 next year - but did not answer with a direct "yes" or "no" when asked whether they will go ahead.
Labor has consistently said it will retain the former government's stage three tax cuts policy, although there is some speculation the cuts could be adjusted before they come into effect in 2024.
"We understand in those stage three tax cuts, they kick in at $45,000 and they go right up the income scale," Chalmers told Ben Fordham on 2GB this morning.
"And we think it is important that when the budget can afford it, that we provide tax relief, particularly for people on low and middle incomes.
"And that's why we haven't changed our position on stage three there in the budget that I handed down last night and we didn't consider changing them in this budget."
The cuts, which will cost hundreds of billions of dollars, were proposed by the Turnbull government in 2018 and legislated with Labor's support following the 2019 election – well before the economic turmoil brought about by the pandemic and Russia's invasion of Ukraine.
Fordham accused Chalmers of seeming "reluctant" to "just say, 'yes, they're coming in'".
"I've got my own way to say it. And the way that I say it is that they're in the budget," Chalmers said.
"They've been legislated, they were legislated some time ago. We haven't changed our position on them."
How much will stage three tax cuts save you?
Currently, Australia has five tax brackets:
- The first $18,200 someone earns is tax-free.
- The next $26,800 (so the income between $18,201 and $45,000) is taxed at 19 per cent, and the $75,000 after that (up to $120,000) at 32.5 per cent.
- The two highest brackets see income between $120,001 and $180,000 taxed at 37 per cent, and any income of $180,001 and above attract a rate of 45 per cent.
Under the stage three cuts, the lowest earners will not be affected, as there's no change to how income of $45,000 or less is taxed.
However, the $120,001-$180,000 bracket will be abolished, and the 32.5 per cent bracket will instead be taxed at 30 per cent.
In addition to this, the threshold for the highest tax bracket will be raised from $180,001 to $200,001.
This means all income between $45,001 and $200,000 will be taxed at the same 30 per cent rate.
| Income | Tax rate before stage three cuts | Tax rate after stage three cuts |
| $18,200 or less | 0 per cent | 0 per cent |
| $18,201 - $45,000 | 19 per cent | 19 per cent |
| $45,001 - $120,000 | 32.5 per cent | 30 per cent |
| $120,001 - $180,000 | 37 per cent | 30 per cent |
| $180,001 - $200,000 | 45 per cent | 30 per cent |
| $200,001+ | 45 per cent | 45 per cent |
The real-world effect of this means Australians earning $45,000 don't get a tax cut, while those earning, say, $80,000 will get an $875 cut, while someone taking home $180,000 will benefit to the tune of $6075.
The maximum saving under stage three cuts of $9075 will only be enjoyed by those earning more than $200,000.
The Parliamentary Budget Office estimated the cuts will cost the budget $61.2 billion over the first three years, and $243.5 billion over the first nine.
There is still every chance the stage three tax cuts will be changed before they come into effect.
But as they currently stand, their introduction will leave higher earners with more in their pockets and lower earners worse off.
In pictures: The federal budget newspaper front pages
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